Consider wheat farmers in a developing country. Farmers/farms are identical (i.e. they have the same cost curves) and wheat is a perfectly competitive industry. Using current technology, the Average Total Cost (ATC) for each firm is represented by ATC₁ in the diagram below. Now suppose that overnight there is a Green Revolution. All farmers adopt new technology (think high- yielding varieties of seeds, better fertilizer etc.) that results in the ATC cost curve labeled ATC2 in the 2209 2 of 3 Problem Set 8 Questions diagram below. Do you expect the number of wheat farms in the market to increase or decrease when the new technology is adopted? Explain your reasoning.
Consider wheat farmers in a developing country. Farmers/farms are identical (i.e. they have the same cost curves) and wheat is a perfectly competitive industry. Using current technology, the Average Total Cost (ATC) for each firm is represented by ATC₁ in the diagram below. Now suppose that overnight there is a Green Revolution. All farmers adopt new technology (think high- yielding varieties of seeds, better fertilizer etc.) that results in the ATC cost curve labeled ATC2 in the 2209 2 of 3 Problem Set 8 Questions diagram below. Do you expect the number of wheat farms in the market to increase or decrease when the new technology is adopted? Explain your reasoning.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
teach this
Transcribed Image Text:Consider wheat farmers in a developing country. Farmers/farms are identical (i.e. they have the same cost
curves) and wheat is a perfectly competitive industry. Using current technology, the Average Total Cost
(ATC) for each firm is represented by ATC₁ in the diagram below.
Now suppose that overnight there is a Green Revolution. All farmers adopt new technology (think high-
yielding varieties of seeds, better fertilizer etc.) that results in the ATC cost curve labeled ATC₂ in the
2209
2 of 3
Problem Set 8 Questions
diagram below. Do you expect the number of wheat farms in the market to increase or decrease when the
new technology is adopted? Explain your reasoning.
Dollars
ATC1
ATC ₂
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education